South Africa: Absa PMI Sinks Back Into Negative Territory, Signalling a Looming Recession

The Absa Purchasing Managers' Index maintained its downward slide in July, falling below the neutral 50-point level for the first time since July of last year when the economy was battered by riots in KZN and Gauteng. It is one of the first economic indicators from this quarter and it signals a looming recession.

The Absa Purchasing Managers' Index (PMI), a key barometer of manufacturing activity, fell in July to 47.6 from 52.2 in June. It was the fourth straight month of decline and the first time it dropped below the neutral 50 mark since July of last year when a lethal wave of riots and looting swept KZN and Gauteng.

"The further decline ... suggests that the manufacturing sector experienced a tough start to the third quarter following a weak second quarter," Absa said.

Social unrest was not the sledgehammer this time round -- it was one of the usual suspects, Eskom, and the scale of the rolling blackouts that were implemented in the wake of the disruptions caused by an unprotected strike over wages. In short, Stage 6.

"Electricity supply disruptions were the likely cause of the drop in production last month," Absa said.

A souring global economy...

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